As national stay-at-home orders have shifted much of the economy toward a delivery model, the negative implications have been broadly felt, extending in the commercial real estate arena. However, Marcus & Millichap says industrial appears to be an exception to the rule.

“Offices, restaurants, hotels and most other retailers have been forced to close their doors to avoid overwhelming the nation’s healthcare system,” according to a special report prepared by the firm’s Stephen Hovland and Kevin Carreon. “Apartment operations could suffer if employment fails to rebound quickly.

“Warehouse and distribution centers, however, are in a relatively favorable position as much-needed supplies are funneled through a smaller supply chain,” they continue. “As a result, these properties are expected to weather the health crisis better than most others regardless of the length of the downturn.”

From an investment perspective, “the structural soundness of the economy failed to warrant significant diversification away from equity markets or specific investment real estate” in the early days of the pandemic, write Hovland and Carreon. “As a result, some well-capitalized buyers may consider shifting into more in-demand industrial assets, such as warehouses and distribution centers.”

Pictured: A single-tenant property within the Freeport Center in Phoenix traded last month, reportedly to KKR.

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